Insurance sector drags FTSE lower

Heading into the close the FTSE 100 is down 25 points as the insurance sector has dragged the market lower.

share

IG Analyst

2014-03-19T15:15:00+0000

Markets have been able to gorge themselves on economic outlooks today: earlier the UK chancellor George Osborne announced his 2014 Budget, and later today the US Federal Reserve chair Janet Yellen will announce the latest Federal Open Market Committee economic projections.

Big losses for insurance sector

Today’s Budget had a distinct tilt towards the grey voter, as the often forgotten savers were finally handed a raft of benefits to tackle their dwindling savings returns. Unsurprisingly, companies like Hargreaves Lansdown, who specialise in these sectors, saw shares spike by more than 6% in the aftermath.

As with all budgets there were losers too, and the UK insurance sector saw Legal & General, Aviva, Standard Chartered and Prudential all drop as the chancellor announced he was planning on ending annuity rules. This wiped out over £3.5 billion of value by mid-afternoon.

Also suffering were both Ladbrokes and William Hill, who saw their shares battered as the ramifications of a more stringent taxation of fixed-odds terminals was factored in by traders.

Markets anticipate $10bn reduction of QE

Today’s US markets are solely focused on Fed chair Janet Yellen's FOMC statement and the clarity over the Fed’s policies towards the US debt-purchasing scheme. The consensus is that we will see a further $10 billion reduced from this scheme, taking the monthly total down to $55 billion. The calm state of equity markets is a reflection of the time spent by ex-Fed chairman Ben Bernanke in forewarning this occurrence.

The IG Alibaba grey market has shown no signs of cooling and the client-trading driven valuation is now pointing towards a staggering $250 billion market capitalisation for the Asian online retailer. If this comes to fruition it would more than double the previously largest IPO valuation for Facebook of $104 billion.

Gold continues to tumble

Gold’s collapse has continued again, stretching into a third day, and is heading towards the more supportive $1340 region.

Crude has once again decided to test the resilience of the bulls by drifting below the $106 level, as it did in both January 2014 and November 2013. Previously this has proven to be enough to tempt the buyers back in.

GBP/USD finds support

Once again GBP/USD has found support following yesterday’s intraday dip below the $1.6600 level. The reaction that we have seen in the last couple of days has seen the currency pair back to the level it was at the beginning of the year. Currency traders have been paying close attention to today’s Budget speech, especially as George Osborne had previously hinted towards wanting to improve the UK’s exports, and from this point last year the GBP/USD rate is up 8% hampering British exporters.

Share this article

share

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

CFDs are a leveraged product and can result in losses that exceed deposits. You do not own or have any interest in the underlying asset. Please consider the Margin Trading Product Disclosure Statement (PDS) before entering into any CFD transaction with us.

The value of shares and ETFs bought through an IG share trading account can fall as well as rise, which could mean getting back less than you originally put in.

Please ensure you fully understand the risks and take care to manage your exposure.

IG does not issues advice, recommendations or opinion in relation to acquiring, holding or disposing of our products. IG is not a financial advisor and all services are provided on an execution only basis.

The information on this site is not directed at residents of the United States or any particular country outside Australia or New Zealand and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.